The new affordability percentage for employer-sponsored coverage will be reduced to 9.61% of the employee’s household income beginning January 1, 2022. This will be applied to self-only coverage for the lowest priced Affordable Care Act (ACA) compliant plan offered by the employer.
This new affordability percentage can be used by Applicable Large Employers (ALEs) to offer affordable, minimum value, health coverage to their full-time employees. Note the decrease in the percentage means that employer may need to increase their portion of the premium contribution to comply with affordability requirements.
As in the past, the Internal Revenue Service (IRS) instituted three safe harbors for employers to utilize:
As employers, be mindful of potential penalties if an employee contribution exceeds 9.61% and the employee purchases an individual plan on the exchange and receives a Premium Tax Credit (PTC).
If you are an ALE and would like to discuss this change and employee benefits services offered by Zinn Insurance, please give us a call.